Drop in num­ber of sell­ers threat­ens to push buy­ers out of mar­kets as sales, prices set records

Steve Ladu­ran­taye – Globe and Mail

Cana­dian real estate sales set fresh records in the third quar­ter, but a dearth of new list­ings threat­ens to push prices sub­stan­tially higher and price many buy­ers out of the market.

“List­ings have really gone down,” said Wayne Hart­ley, a real­tor at Sud­bury Achiev­ers Realty Inc. “At the higher end of the mar­ket things have really tailed off, you just can’t find any­thing for sale. So if they list, they go fast for pretty good prices.”

The Cana­dian Real Estate Asso­ci­a­tion said Thurs­day 135,182 homes were sold from July to Sep­tem­ber, an increase of 18% from last year and the most ever sold in the third quar­ter. Aver­age prices gained 11% to $327,736.

“It is per­haps not a sur­prise that with demand up and sup­ply down, the dif­fer­en­tial has resulted in a price squeeze,” said Eric Las­celles, chief eco­nom­ics and rates strate­gist at TD Secu­ri­ties. “The new level of prices is a record high, mean­ing that all of the ear­lier declines have been fully unwound.”

While sales were up, new list­ings took a 17% fall from the same time last year on a national basis. Homes have become par­tic­u­larly hard to find in Saskatchewan, with new list­ings down 37.5% in Saska­toon and 28.3% in Regina.

Com­ment: What about the 42% drop in Toronto real estate listings?

“We’ve seen a shift toward a sell­ers mar­ket, that’s for sure,” said Sinda Shaw, a real­tor at Sut­ton Group Nor­land Realty in Saska­toon. “So for peo­ple who were able to hold off on sell­ing in a down mar­ket, things look good. For those who want to buy now, maybe the cycle is shift­ing and it’s a lit­tle less favourable for them.”

The lack of list­ings has cre­ated a sell­ers mar­ket, with homes being sold as quickly as they are listed in most mar­kets across the coun­try. That could change, how­ever, as more sell­ers are drawn in by the allure of higher prices.

“Head­line aver­age price increases over the rest of the year are expected to prompt sell­ers to return to the mar­ket after hav­ing retreated to the side­lines late last year and ear­lier this year,” said CREA econ­o­mist Gre­gory Klump.

On a sea­son­ally adjusted basis, a method which tries to smooth out the data and take things such as sea­sons and one-time events into account, 127,941 homes were sold in the third quar­ter – an increase of 12% for the pre­vi­ous quar­ter. The total value of sales also set a record in the third quar­ter, at $42.1-billion – an increase of 20% from the third quar­ter last year.

“Momen­tum for sales activ­ity remained strong through­out the third quar­ter,” said Dale Rip­plinger, the association’s pres­i­dent. “Low inter­est rates, rebound­ing con­sumer con­fi­dence and an improv­ing over­all sense of eco­nomic secu­rity con­tinue to draw home buy­ers to the hous­ing market.”

Mean­while, sales con­tin­ued to increase on a monthly basis in Sep­tem­ber, 1.5% higher than in August at 42,958. The increase pulls the sea­son­ally adjusted activ­ity 63% higher than the low hit in January.

The busiest mar­kets year-over-year were Toronto and Van­cou­ver, accord­ing to the real estate asso­ci­a­tion, with the num­ber of units chang­ing hands up 28% and 124% respectively.

“The national aver­age price con­tin­ues to be skewed upward by a sus­tained increase in sales activ­ity, includ­ing a sharp rebound in activ­ity at the higher end of the price spec­trum, in some of Canada’s prici­est mar­kets,” Mr. Rip­plinger said.

New­found­land and Labrador led the year-over-year price gain­ers, with prices increas­ing 14.5% from last Sep­tem­ber. Greater Van­cou­ver saw prices increase 14%. Not all mar­kets have fared that well. Hal­i­fax has seen the steep­est drop with aver­age prices fall 6.2%, with Sud­bury close behind with a decrease of 5.1%.

“There is no deny­ing that the Cana­dian hous­ing mar­ket is revving up, and extremely low mort­gage rates, attrac­tive home prices, and pent-up demand have com­bined to super­charge the sec­tor,” Mr. Las­celles said.

“How­ever, we feel obliged to note that not all aspects of the hous­ing mar­ket are show­ing such strength. Recent strength has been more regional than nation­wide, hous­ing starts are still low, and new home prices are still gen­er­ally declining.”

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